Considerations on Redistributions of Wealth
I’ve been considering lately what the outcomes could be of the rise of artificial intelligence, and how this may concentrate wealth into a small minority of the world’s population.
The first company that gets anywhere close to AGI (Artificial General Intelligence) — surpassing human intelligence across all fields — would potentially be able to collect most of the world’s resources. This would be the last invention humans would ever have to make because, by definition, it makes no sense for a human to do any cognitive work when a machine can do it faster and better.
But there will still be billions of humans alive, so something will have to be done. One idea floating around for a few decades is the concept of UBI — Universal Basic Income.
I am not 100% sure about this because I suspect that at the basis of UBI, there is a misunderstanding of how the economy works. Things are not priced at a specific price to keep people away from them. There is no agreement to withhold goods and services from people.
There is, in fact, a specific price of production for any good or service under which it cannot be sold. This is the reality of the world. So, giving people more money without addressing the underlying reality would just raise prices for everyone, and the extra money that everyone receives would be completely offset by rising prices.
This is because house prices are closely tied to the interest rates set by the national banks in most countries. This is because mortgages and rents are actually dependant on what people earn, and typically people may spend 30% of their income on housing, regardless of the prevailing interest rates. So when the interest rates are higher, people can still only spend 30% of their income on housing, and so this has a negative effect on the real estate market.
However, greater aggregate demand from UBI could also incentivize increased production and supply, potentially keeping prices in check. The full macroeconomic effects are complex and debated.
It could be funded by capturing part of the economic gains from automation through corporate taxes, wealth taxes, etc. This could avoid simply increasing the money supply.
And the goal of UBI is not necessarily for people to buy more things but rather to have basic security and meet essential needs. People may use UBI to pursue education, switch careers, start businesses, or simply write poetry.
Even if UBI does not fully address economic structure, it could be part of a transition to a new system better suited for automation — but precisely what that looks like is an open question.
